November 28, 2017

The major stock market averages opened higher this morning (Dow +126 pts; SPX .5%), hitting new all-time highs. Ten of eleven sectors are in the green led by financials, industrials and materials. Only real estate is down in early trading. The VIX Index is still hovering around 10. European markets are poised to close up about .6%. The dollar is stronger on better economic data and so most commodities are trading lower. WTI crude oil is down .5% to trade around $57.80/barrel. OPEC is scheduled to meet this week. Bonds are up modestly as yield tick lower. The 5-year Treasury yield is back down to 2.04% and the 10-year is trading at 2.32%. By the way, in a congressional confirmation meeting today, Fed Chair candidate Jerome Powell implied the Fed will likely raise interest rates next month. 

The economy is humming right along. CNBC reports Cyber Monday retail sales broke records at nearly $6.6bil. Separately, the Richmond Fed Manufacturing Index soared to its highest level in over 10 years, with solid improvement in factory orders, backlogs & shipments. The Conference Board reported very strong results for its monthly survey of consumer attitudes. Consumer confidence in the economy is at a 17-year high. And finally, S&P reports the Case-Shiller Home Price Index accelerated to 6% y/y growth in September. Not surprisingly, Citigroup’s US Economic Surprise Index has fully rebounded from very weak readings last summer and is now back to levels not seen since early 2014. 

The Federal Housing Finance Agency (FHFA) said it will allow Fannie Mae (FNMA) and Freddie Mac (FHLMC) to buy mortgages as high as $453,100 in 2018. The current maximum conforming loan level is $424,100. FHFA said it is raising the limit because home prices are rising at a fast clip. Not surprisingly, the homebuilders are up nicely today. Toll Brothers (TOL) is up 1.7% today and 58% this year. 

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